Key insights
- Amazon is opening its supply chain services to external businesses, leveraging its extensive logistics network. This expansion is anticipated to create new revenue streams, contributing to the company's stock performance. Initial customers include P&G and 3M. The move is viewed positively, similar to the impact of Amazon Web Services on cloud computing, and could improve AMZN's earnings outlook.
SEATTLE - Amazon (NASDAQ:AMZN) announced today the launch of Amazon Supply Chain Services, opening its logistics network to businesses outside its retail ecosystem. The $2.89 trillion company’s stock has surged 41% over the past year, trading near its 52-week high as investors anticipate new revenue streams from this expansion.
The service provides freight, distribution, fulfillment, and parcel shipping capabilities to companies across industries including healthcare, automotive, manufacturing, and retail, according to a press release statement.
Procter & Gamble, 3M, Lands’ End, and American Eagle Outfitters are among the initial customers. Procter & Gamble is using Amazon’s freight services to transport raw materials to production facilities and move finished goods across its distribution network. 3M is leveraging the freight services to move products from manufacturing sites to distribution centers. Lands’ End is using inventory pooling within Amazon’s network to fulfill orders across multiple sales channels, while American Eagle Outfitters is using the parcel shipping network for deliveries from its websites.
The service builds on Amazon’s existing third-party logistics operations, which have served hundreds of thousands of sellers over the past three years.
"Amazon is bringing the infrastructure, intelligence, and scale of its supply chain services to businesses everywhere, much like Amazon Web Services did for cloud computing," said Peter Larsen, vice president of Amazon Supply Chain Services.
Amazon’s freight network includes 80,000 trailers, 24,000 intermodal containers, and 100 aircraft. The service offers ocean, air, ground, and rail freight options with customs clearance and shipment tracking.
The distribution and fulfillment component allows businesses to store inventory and fulfill orders across sales channels including websites, marketplaces, social media, and physical stores. The parcel shipping service provides two-to-five-day delivery speeds with seven-day-a-week service.
Businesses can access the services through a centralized console at supplychain.amazon.com.
In other recent news, Amazon.com has seen significant developments with Scotiabank and KeyBanc both raising their stock price targets. Scotiabank increased its target to $325, citing Amazon Web Services’ (AWS) revenue acceleration to 28% year-over-year in the first quarter, marking a $2 billion sequential increase. KeyBanc raised its target further to $330, highlighting a stronger profit outlook for 2027. Meanwhile, Wolfe Research noted that tech giants, including Amazon, have driven 70% of the S&P 500’s gains amid an AI rally. In a related note, Goldman Sachs recommended investors favor hyperscalers over chipmakers for AI infrastructure investments, suggesting skepticism around return on investment for the latter. Audible, another company making headlines, opened a month-long listening lounge in New York, offering visitors access to over 300 audiobooks across various genres. These developments reflect ongoing trends and strategic moves in the tech and entertainment sectors.
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